RBI Monetary Policy Committee Update and Fixed Income House View by Tata Mutual Fund
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KEY DECISIONS
At its meeting held today, the RBI Monetary Policy Committee (MPC) voted with a 5-1 majority to keep key rates unchanged (Repo Rate at 6.50%, SDF rate at 6.25% and MSF rate at 6.75%).
MPC unanimously voted for a change in stance from ‘withdrawal of accommodation’ to ‘neutral’ and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth.
GDP GROWTH & INFLATION ESTIMATES
Global economic near-term outlook is positive, significant challenges to medium term growth outlook in the form of ongoing geopolitical conflicts
* Domestic economic activity continues to be steady as suggested by high frequency indicators. The supply side components remain resilient. Above normal southwest monsoon rainfall and better kharif sowing continues to support agricultural growth.
* Rural Demand is trending upwards while urban demand continues to hold firm. Central and State Government capex has picked up pace after subdued first quarter.
* India’s growth story remains resilient as consumption and investment demand gains momentum.
* Real GDP growth for 2024-25 is projected at 7.2 per cent with Q2 at 7.0 per cent; Q3 at 7.4 per cent; and Q4 at 7.2 per cent. Growth for Q1FY26 is projected at 7.3 per cent.
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